Chapter I: Introduction
1.1 Company Background
AirAsia Berhad, which is also known as AirAsia, is an airline company that provides air transportation service. The airline was established in 1993 and started operation 18 November 1996. A government-owned conglomerate DRB-Hicom originally founded it. They were having heavily indebted on December 2,2001. An executive from company Tune Air Sdn, Tonny Fernandes, purchased it. The company’s headquarters is in Sepang, Selangor, Malaysia. After Tonny Fernandes changes all the operation management in the company, AirAsia its now can expands and becomes the largest low fare airlines even since then. With a fleet of 72 aircraft, AirAsia flies to over 61 domestic and international destination. They have 108 routes and operate over 400 flights daily from hubs located in Malaysia, Thailand, and Indonesia. Today, AirAsia has flown over 55 million guests across the region and continues to create more extensive route network through its associate companies.
AirAsia believes in the no-frills, hassle-free, low fare business concept and feels that keeping costs low requires high efficiency in every part of business. Through the corporate philosophy of ‘Now Everyone Can Fly’, AirAsia has sparked a revolution in air travel with more and more people around the region choosing AirAsia as their preferred choice of transport. In the competitive airline industry, AirAsia keep improving their supportive and constructive management by being supportive and responsive in listening to its employee for any ideas for reducing cost. AirAsia is leading way for developing low cost airlines and its promises to revolutionize the international market place.
1.2 Industry Background
There is new concept of aviation industry that gives a new opportunity for everyone to fly. It called Low-Cost-Carrier concept. LCCs open a totally new product such as no frills, no food, no drinks, no spacious seat, no travel agent bookings, but a very low price. Therefore the number of competition in LCCs becomes more and more compete within this industry. The competition is not only within LCCS, but with full-service carriers also. Some LCCs carriers are profitable and some are not profitable.
The term “low cost airlines” is for the first time used in the United States in 1949. The firs successful low cost carrier was Pasific Southwest Airlines in Texas, which pioneered the concept. They began in 1971 and the only one airline to have been consistently profitable in every year of operation since 1973. Today, Southwest Airlines operates more than 3,100 daily flights to 62 cities across the United State and registers yearly more than 80 million passengers. In Europe, Low Cost Airlines started in 1990s. Genuine Low cost operations began in Great Britain in 1990s with the Irish company Ryanair, which was patterned on American Southwest Airlines. In the year 2005, there are 60 low-cost airlines operating in Europe. In Asia, it started since 2000. Low cost airlines become gradually increased in the market and it is start by AirAsia. South East Asia has witnessed explosive growth in the budget airline market through AirAsia, Malaysia. AirAsia has rapidly expanded to become the major carrier in region, and it success.
After the terrorist attack in United State, 11 September 2001, which hit on two infamous building, the growth of low cost airlines becomes high. The reason could be due to people are scared to flight overseas. Therefore the region airlines, which provide the Low cost carrier, win the demand over this accident. So therefore the competition of low cost airlines is high within the industry.
3. The Usefulness of this project
By using the theory and information of AirAsia, it’s to see how relevant the strategy is and to see how powerful this strategy that can bring AirAsia as the best budget airline in the worlds. Through this project, let gives AirAsia to see a different perspective of low cost...
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